Boston FHA Loans and the First Time Home Buyer – Boston FHA Home Loan Update

The FHA insures loans taken out with approved lenders. The FHA backs the loan amount making it easier for first time home buyers to obtain a mortgage. FHA loans do have limits. In the Suffolk County Boston area, a single family home mortgage can not exceed $523,750. The home must also have dedicated sleeping and cooking areas to meet the FHA requirements. Home buyers must also meet credit score requirements and be able to come up with the required down payment. The duration of the loan will also determine the amount of the Mortgage Insurance Premium (MIP). If home buyers and the home they hope to own meet all of the FHA requirements, this type of loan may give prospective home owners a chance to purchase their home with less money down, and at a competitive interest rate.

Boston FHA Home Loan Suffolk Sharon MA

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If the home qualifies for an FHA loan, the buyers will be charged a percentage at the time of closing and a fee is tacked onto their mortgage payment each month. The upfront MIP at closing is 1%. Home buyers with decent credit can get a loan through an FHA approved lender for a small down payment – 3.5% in most cases. For a 3 bedroom, 2 bath home on Lakeview Street in Sharon, MA listed at $359,900, buyers would need to come up with a down payment of $12,597 and an up front MIP payment of $350.90 at closing. Closing costs also have the option to be rolled into the mortgage reducing the amount home buyers need to come up with on the day of closing.

Although the FHA requires a minimum of 3.5% down, lenders do have the option based on the buyer’s credit score to require a larger down payment. A buyer’s credit history and other factors may affect the amount of down payment required and term of the loan. Buyers don’t have to have stellar credit, but they should be aware of what their credit score is and how it will affect their ability to qualify for a smaller down payment. One of the main drawbacks is the loan amount limit. But in theBostonarea, the median home price is $573,000 just above the FHA limit so buyers should be able to find a home that is within the limits fairly easily.

An FHA loan has no prepayment penalty which makes it easy for home owners to pay off their mortgage quickly, saving them many thousands of dollars in interest. This type of loan is it may be assumable, making it easier to sell their home in the future. Lenders approved by the FHA may also be more forgiving and work with mortgage holders if they find it hard to make their monthly payments. FHA loans can also be used to make improvements to their home under the FHA 203A program. First time home buyers may find an FHA loan is a cost effective way to obtain a mortgage they can afford.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

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